Good luck bro. We feel your pain. My wife has a dysfunctional family albiet not as bad as what you have described. Non the less we spend an inordinate amount of time establishing and keeping proper boundaries with them. If ya don't you'll wake up one day feeling like you are on the set of the Jerry Springer show !!!
Let us say this... You will never be able to change her parents or make them any less dysfunctional. Folks like that don't know they are sick and likely never will. Let's face it they are adults probably in their fifties and have shown little propensity toward personal growth. At this stage in life you can assume they will take will take their dysfunction to the grave.
for future reference.... If you ever meet another girl from a like family, RUN RUN RUN !!! Unless of course, she is "healthy" and sees her families dysfunction and has the ability to establish proper boundaries with them. Fortunately, this is the case with my wife and her family. They have issues, she knows it, and we set the tone for the family dynamics. We have built a "wall of seperation" between them and our nuclear family. Hence, we don't allow their dysfunction to seep into our private lives. It can be done only if you are both "healthy" enough to see the dysfunction, and we fortunately are. It's still a mental drain from time to time because you do have to work at preserving the boundaries you establish. If you don't these knuckleheads will find a way to break through. Now, conversley if your significant other is caught up in the dysfunction and you are the only one that sees it..... Well bro do yourself a major favor and get the F**k out !!
Remember Bro, life is 10% what happens to you and 90% how you deal with it. If life hands you a lemon .... F**k it, make some lemon aide